Stoxx has entered into a memorandum of understanding (MOU) with Mitsubishi UFJ Trust and Banking Corp (MUTB) to create and market new smart beta indices in a move that further expands the European index provider’s reach in the Asia-Pacific region.

Under the terms of the agreement, MUTB plans to license a wide variety of Stoxx indices to create investment products as the bank seeks to increase its smart beta offering to retail and institutional clients. Stoxx also plans to develop smart beta indices with support from MUTB.

The demand for these strategies is strong in Japan, said Shirley Low (pictured), head of Asia/Pacific at Stoxx. “We have seen demand for our smart beta family grow after we licensed the Stoxx Global 1800 Minimum Variance Unconstrained to Resona Bank and the Stoxx Asean-Five Select Dividend Index to Nomura last year,” she said. “This week, we licensed the Stoxx Japan 600 Minimum Variance Unconstrained index to MUTB as the underlying for a passive product for institutional clients. There is a strong momentum following the announcement last year by Japan’s Government Pension Investment Fund (GPIF) that it will adopt a smart beta strategy in its active management investment for the first time.”

One popular application of smart beta has included a strategy that would reduce risk by lowering the cost of options on the index, thereby making it extremely attractive for structured products with all parties benefiting, said Low.

Stoxx followed the setting up of a subsidiary in Sydney with the opening of its office in Japan last month, said Low. “Together with our smart beta specialist and myself based in our headquarters in Zurich, we ensure continuous support for our clients after Asian office hours and provide a direct link to the heart of the Stoxx index creation lab,” she said. “We are committed to continue our focus and expansion in the region.”

MUTB is a subsidiary of Mitsubishi UFJ (MUTJ) Financial Group and had assets of ¥31.4tr (US$261.9bn) as of March 31, 2014, which is one of Japan’s largest trust banks. MUTJ is the leading provider of structured products in Japan with a 25% market share and more than ¥640bn (US$5.3bn) of product sales in 2014. The Japanese bank has more than 500 live products in Japan’s retail market either as distributor (457 products) or counterparty provider (46 products).

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